AUA Treasurer's Report 2020
By: David F. Green, MD, FACS | Posted on: 06 Aug 2021
From a financial perspective, the AUA’s Fiscal Year, which began in January 2020, was full of promise. We had successfully initiated a partnership with Verana Health regarding the AUA Quality Registry (AQUA), our advertising royalties from publications were improving and we anticipated an outstanding annual meeting in Washington, D.C.
Of course, everything changed with the arrival of COVID-19, and the AUA was not spared. By mid-March we had closed HQ, canceled the 2020 Summit scheduled for March 16 and reached the painful, but necessary, decision to cancel the 2020 Annual Meeting (AM). We experienced a market decline in our investment portfolio of 15% coupled with uncertainty as to whether the economy was entering the start of a long-term recession/depression, or a “U-shaped” or “V-shaped” recovery.
As one might imagine, the COVID-19 crisis had a devastating impact on AUA revenues while simultaneously confronting the AUA with the urgent need for unprecedented amounts of cash to reimburse meeting registrations, industry sponsors and exhibitors, meet hotel registration commitments etc. Meanwhile, staff were suddenly working remotely while dealing with their own family crises; the AUA had to rapidly create novel virtual programs to meet members’ needs, and physician leadership was grappling with the devastating impact of COVID-19 on their local practice environments. How would we create cash, with little revenue coming in, expenses exploding and our long-term investments rapidly losing value?
We began by quickly applying for monies that Congress had rapidly made available through the Paycheck Protection Program (PPP). AUA was successful in qualifying for $3.5 million to assist in meeting our AUA payroll obligations. Because of our long-term financial strength and banking relationship with SunTrust (Truist), we were able to obtain a secured $10 million line of credit (LOC) in short order, which enabled the AUA to begin to refund fees it had received related to the AM. As the stock market fell, we were disciplined in rebalancing the AUA’s portfolio to stay true to our Investment Policy. Then when the stock market rallied back to previous highs, we moved $15 million to a money market to preserve principle and cash for the uncertainties of the COVID-19 crisis. Finally, the AUA had fortuitously routinely obtained pandemic insurance coverage for its AM and in 2020 it promised to cover many of our AM losses. Although indemnification would take time and require negotiation, it has been a tremendous relief.
As the pie charts in Figure 1 indicate, our final 2020 revenues are down considerably, almost $7.5 million less than our original 2020 budget. However, the expense side dropped even more in 2020–about $10 million–as the AUA did not incur many of the costs associated with in-person meetings, travel and lodging have been minimal, and staff did a great job managing costs within their departments. The net result is that, despite a tumultuous, unprecedented year, the AUA was not only able to survive but achieved a $1.3 million audited operational surplus yet also had to accumulate $6 million in new debt to get through 2020.
In preparing for 2021 and beyond, AUA is maintaining a strong cash position and has secured an LOC as an intermediate cash reserve. Uncertain about the direction of COVID-19, last fall we prepared 2 budgets. One budget was based on a “Hybrid” AM scenario, the other on a totally “Virtual” AM. The graph in Figure 2 illustrates revenue and expenses for the 2021 “Hybrid” budget. There is a projected $1.4 million operational deficit, which the AUA Board has approved as we transition back to a new normal.
Although COVID-19 continues throughout the world, it looks as though we will have the opportunity to meet in person in Las Vegas in September. Many of our members, domestic and international, long for the sense of community provided by our annual meeting. Although the makeup of this and future Annual Meetings may evolve to more virtual content, we will always need opportunity to meet in person to learn, exchange ideas and grow the collegiality we all treasure. While AUA’s finances and our member’s lives may not be completely back to normal, it does appear we have weathered the maelstrom of 2020 and are once again moving forward in 2021.